8 reasons why you should read loan terms and conditions

Reading your loan terms and conditions should be a necessity for any potential borrower, but just in case you don’t see why you should…

Here are eight(8) reasons why you should read the terms and conditions of your loan.

Every lender has a different way of calculating their profits on a loan, and by profit, we mean interest rate. Just because lender A gives you an interest rate of 10% on a 300k loan doesn’t mean it’ll be the same for lender B.

Interestingly, lender B might even offer you a 5% interest rate on that 300k loan. When you get a loan offer with a slightly high-interest rate (any interest rate, really), you should compare it with the offers of other lenders to see if it’s the best for you or if you could find something better. In essence, you can find a loan’s interest rate clearly stated in the terms and conditions.

Some fees will be paid during the processing period that might not be explicitly mentioned but will be in the loan terms and conditions. Sometimes you wonder why you’d apply for a #50,000 loan and you’d be given #48,500, well that fee deducted is called a processing fee that you may not know about, except you take the effort to read through the terms and conditions.

Once again, we advise that you find out if any other fees are included in your principal amount (loan + interest rate) by reading the terms and conditions, then factor these fees into your budget before proceeding with the loan transaction.

Most borrowers tend to assume how or when they’ll pay back their loan but the truth is, you might think one thing and your lender, another.

The loan terms and conditions always contain accurate information on how long you’ll be repaying a loan for, how you’ll be repaying it and how lenient the lender will be towards a loan renegotiation.

Everything that has to do with your repayment will be included in your terms and conditions. Rather than assumptions or guessing games, ensure you read through the loan terms and conditions.

Now there may come a time when you’ll be unable to pay your loan on time (never say never), you may be offered a grace period by your lender or you may not (you have to inform them either way) but there will definitely be a penalty fee levied against you (amount differs between lenders)

All these (the grace period and penalty fee) will be included in your loan terms and conditions and happen to be very important knowledge to have for when you unintentionally miss your loan repayment. See why you should read T&C?

The lender might not outrightly say it but it may be stated in your loan terms and conditions. They have the right to report you to any of the functioning credit bureaus in the country if you default on your loan.

It’s advisable you read up on your loan terms and conditions for the knowledge of who you would be reported to if you perhaps bail out on your loan repayment.

One thing you must take note of is that any guarantor (family or friend) that aids you in getting a loan is going to be punished if you default on loan repayment.

The loan terms and condition also contains what your lender is legally able to do to any defaulting guarantor. This is why you should be well informed of the consequences of defaulting on your loan obligation either as the direct borrower or as a guarantor. Here are some other consequences of defaulting on your loan obligation.

Yes, you do have rights as a borrower which means that there are things that you can and can’t do as a borrower. As well as things that can and can’t be done to you by a lender.

Reading the terms and conditions can help you discover and understand what you can and cannot do and if your rights have been infringed upon in any way. Check out some other rights you have as a borrower.

You can never have too many inquiries and reading the terms and conditions is bound to leave you with more than a few.

Reading the terms and conditions allows you to ask a lot of questions you’ve had in mind and even those you didn’t think about previously. It will help you clear up any misunderstandings and uncertainties before transacting.

Remember, any lender who’s not interested in providing clear answers to your questions may just be one you should steer clear of.

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